Correlation Between Hon Hai and Yonyu Plastics
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Yonyu Plastics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hon Hai and Yonyu Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hon Hai Precision and Yonyu Plastics Co, you can compare the effects of market volatilities on Hon Hai and Yonyu Plastics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hon Hai with a short position of Yonyu Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Yonyu Plastics.
Diversification Opportunities for Hon Hai and Yonyu Plastics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hon and Yonyu is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Yonyu Plastics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yonyu Plastics and Hon Hai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hon Hai Precision are associated (or correlated) with Yonyu Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yonyu Plastics has no effect on the direction of Hon Hai i.e., Hon Hai and Yonyu Plastics go up and down completely randomly.
Pair Corralation between Hon Hai and Yonyu Plastics
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 7.56 times more return on investment than Yonyu Plastics. However, Hon Hai is 7.56 times more volatile than Yonyu Plastics Co. It trades about 0.13 of its potential returns per unit of risk. Yonyu Plastics Co is currently generating about 0.3 per unit of risk. If you would invest 16,550 in Hon Hai Precision on December 1, 2024 and sell it today you would earn a total of 850.00 from holding Hon Hai Precision or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Yonyu Plastics Co
Performance |
| Timeline |
| Hon Hai Precision |
| Yonyu Plastics |
Hon Hai and Yonyu Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Yonyu Plastics
The main advantage of trading using opposite Hon Hai and Yonyu Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Yonyu Plastics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Yonyu Plastics will offset losses from the drop in Yonyu Plastics' long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Yonyu Plastics vs. Ocean Plastics Co | Yonyu Plastics vs. San Fang Chemical | Yonyu Plastics vs. Universal | Yonyu Plastics vs. Asia Polymer Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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